Committee weighs reference-based pricing, global hospital budgets as bill moves through markup

Lawmakers and agency and hospital representatives spent the March 13 Health & Welfare committee meeting discussing a bill that would require implementation of reference-based pricing for hospital services and direct the Green Mountain Care Board to establish global hospital budgets over a multi-year timeline.

The committee examined the bill’s core elements, including a proposal discussed by Jeff Fannon, executive director for Montana, that would set reference-based prices for certain hospital services at multiples of the Medicare rate. “The concept here is reference based pricing ... in this case, the proposal, it’s bill charges at 200% of Medicare,” Fannon said during the meeting. He and others described carve-outs for critical access hospitals and said the draft segregates larger hospitals for initial application.

Why it matters: Devon Green, Vermont Association of Hospitals and Health Systems, told the committee that a Green Mountain Care Board report estimated a statewide revenue reduction in one scenario of about $79,000,000 to hospitals, and that excluding critical access hospitals would still produce roughly a $62,000,000 cut. “This would basically be a 79,000,000 cut, to hospitals statewide,” Green said, adding the state’s total hospital operating figure cited in testimony was “$5,455,000,000 dollars.” Green also warned that other states’ experience showed reference-based pricing affected about 1% of the population; applying it to all state employees could affect an estimated 9% of Vermont’s population, per testimony.

Committee members focused on pacing and protections. The bill as drafted provides for phased implementation: several committee members and witnesses recommended beginning with a small set of non–critical access hospitals and phasing in broader application. The chair and staff discussed changing an initial start date of 2025 to language requiring implementation “as soon as practicable” with a possible backstop of “no later than 2027.” Diane Lambert, Green Mountain Care Board, cautioned that a firm deadline could force reallocation of the board’s staff and resources: “Because there’s so many unknowns ... by putting in a firm deadline ... I would be concerned that we would have to divert all kinds of resources,” Lambert said.

Alignment with federal AHEAD agreement and global budgets drew sustained attention. Agency of Human Services (AHS) witnesses asked the committee to align timing and methodology with the state’s AHEAD (All-Payer) commitments to the federal government. Sarah Rosenblum, deputy director for health care reform at AHS, said the federal AHEAD program “requires that we have some hospitals participate in a hospital global budget by 02/19/27,” and emphasized that the federal landscape remains fluid and could affect timing and methodology. AHS and the Green Mountain Care Board both urged coordination so state action does not conflict with federal agreements.

Scope and benchmarks: Participants debated whether reference-based pricing should be framed as payer-side regulation (as Oregon implemented) or provider-side rate-setting (the Green Mountain Care Board’s usual framing). Testimony supported allowing the board flexibility to select benchmarks where Medicare lacks applicable rates; some suggested indexing to measures such as the Medicare Economic Index, or using “same or similar” Medicare services as the benchmark. Committee staff noted questions remain about nonhospital services and whether the statute should limit the initial scope to hospital services or explicitly include ambulatory and primary care options.

Hospital reporting and financial transparency: Several lawmakers and witnesses urged stronger reporting requirements to allow the board to assess impact. One committee member recommended giving the Green Mountain Care Board authority to review payer–hospital contracts or otherwise obtain more transparent contract data to evaluate proposed budgets. The bill’s reporting provisions already would require hospitals to file budget information and certain compensation data, but witnesses recommended further standardization and possibly funding for a consultant to align hospitals’ accounting with a uniform reporting format.

Unresolved issues and next steps: Committee members said they would continue to refine timelines (the bill drafts referenced fiscal-year targets in 2026–2028 and a broader goal for all hospitals by 2030), definitions of which hospitals are included, benchmarks for pricing, and reporting formats. AHS and the Green Mountain Care Board signaled they will continue drafting coordinated language and that the committee will seek additional testimony and technical revisions before finalizing bill language.

Ending: The committee paused markup to allow AHS to present technical comments later in the hearing; lawmakers signaled an intent to return to the bill after additional stakeholder consultation and staff drafting.